Toronto’s APX Lending has teamed up with one of its investors, Netcoins, to help the Vancouver-based company’s customers access cryptocurrency-backed loans.
The news: APX, which got its start providing crypto-backed loans directly to consumers and businesses last year, has developed a software platform designed to help partner companies launch embedded credit products that use Bitcoin and Ether as collateral under their own brand. Netcoins, which is owned by TSX Venture Exchange-listed Bigg Digital Assets, is a crypto exchange that serves Canada and the United States. Canadian Netcoins users can now access crypto-backed loans within the company’s digital asset trading platform. APX is providing the technology, capital, underwriting, collateral management, compliance, and servicing for these credit products. For Netcoins, the arrangement offers a new revenue stream without the need to build in-house lending infrastructure.
From the source: In an interview with BetaKit at Blockchain Futurist Conference in Toronto on Tuesday, APX founder and CEO Andrei Poliakov said the startup built out its own crypto lending business to prove out its tech, but that “the long-term play” was always providing “lending-as-a-service” to other companies, from fellow crypto firms to banks. The bigger bet is that as traditional financial institutions become more comfortable with crypto, they will start offering these lending services to their own clients, and APX would rather provide the infrastructure to facilitate this than compete directly against them.
Following the thread: Poliakov previously co-founded and led regulated Canadian crypto trading platform Coinberry. That business was acquired in 2023 by fellow Toronto firm WonderFi (which sold to larger US trading app Robinhood earlier this year). With APX, Poliakov and his former Coinberry colleagues have turned their attention to crypto lending. Crypto-backed loans allow clients to borrow against their crypto holdings without selling them. Poliakov said APX’s clients have used them to buy houses, grow their businesses, and buy more crypto. Last April, APX became the first company of its kind granted exemptive relief by the Canadian Securities Administrators (CSA) to provide crypto-backed loans.
Final thought: APX is not the only Canadian crypto company looking to make inroads in the space. Toronto-founded, Cayman Islands-based Ledn, which also provides Bitcoin-backed loans, forecasts growing demand for such products, and Montréal crypto exchange Shakepay is also looking to enter the fray after securing relief from Québec’s securities regulator this year. Whether Canadian banks and credit unions—who have been reluctant to provide such offerings given crypto’s high volatility—are willing to follow suit remains to be seen. For his part, Poliakov claims APX is already in “advanced discussions” with some of them.
Feature image courtesy Josh Scott for BetaKit.